Bua Briefs 2 of 2012

2012 State of the Nation Address (SoNA)

President Jacob Zuma’s fourth SoNA was described as optimistic and distinguished and as the President’s best address since taking office in 2009. Overall, SoNA was applauded for delivering a programme of industrialisation, modernisation and social equity that will draw all sectors and strata of our society into our development over the coming years and decades.

Both the SoNA, as well as the debate, put forward a vision for South Africa founded on the urgent need to address the triple evils of poverty, inequality and unemployment.
Compared to other commitments in the address, infrastructure service delivery generated the most interest from a broad spectrum of commentators and contributed to the majority of the positive reactions to the SoNA.

Ministerial responses during the debate to the SoNA and Ministerial cluster briefings promptly and accurately responded to and clarified various critiques and concerns.

Key messages

Supporting statements

Government's investment in key strategically located infrastructure projects will drive job creation and industrialise the economy.

Government has opened an unprecedented window of opportunity with our infrastructure programme.

This infrastructure programme constitutes the biggest public-private partnership in which we will engage as a nation.

As government puts up the finance for the development programme, the private sector’s involvement will create jobs and stimulate demand for goods and services.

Infrastructure can unlock Africa’s consumer base of one billion people; its enormous reserves of oil, gas and minerals; large agricultural land and major rivers; a climate that can drive solar energy; a very long coastline that can facilitate trade; and very high projected growth rates over the next decade.

Our infrastructure drive will help to underscore South Africa’s status as a safe – or at very least, safer – haven for investment at a time of persistent international downturn. This will further promote the country as an attractive gateway for businesses looking to extend their operations into Africa.

The Presidential Infrastructure Coordinating Commission (PICC) is leading government’s efforts to create employment opportunities for all South Africans and transform the economy and society.

Government is building on the national and international confidence that was earned through the realisation of a world-class infrastructure plan that saw one of the most successful hostings of the FIFA Soccer World CupTM in 2010.

Government has already put in place mechanisms to address the challenge of scarce skills, particularly in engineering, project management, financing, procurement and technical skills such as artisans, technologists and technicians.

Infrastructure is not only a consumer of skills but also a training space, where government will set skills and apprenticeship targets in the project specifications.

The infrastructure plan requires reprioritisation across government, with a clear shift of spending from consumption to investment in laying the basis for our long-term prosperity.

Government will place the Infrastructure Development Bill before Parliament during 2012 to address various issues.

The infrastructure programme requires coordinated issuing of permits and licences, environmental impact assessments and resolution of land servitudes.

It requires tight coordination between the three spheres of government and with public entities.

Government is developing focused project-management systems and clear performance dashboards to identify the state of progress with build programmes to enable the three spheres to intervene early and decisively.

We will address the challenges of containing the costs of the build programme and combating corruption.

Government is in discussion with the private sector and organised labour to conclude an integrity pact as part of a broader accord to address the need for competitive pricing, firm action against public- and private-sector corruption and cooperative industrial relations.

The competition authorities are ready to crack down on collusion and price fixing.

Combating corruption will ensure that the hard-earned monies that South Africans pay in taxes do in fact go to rebuilding infrastructure and supporting service delivery. Specific anti-corruption measures will be identified and built into all processes.

The growth and development of the mining industry cannot be delinked from addressing historical inequalities and imbalances in our society.

The NGP identified the mining value chain as one of the key drivers of jobs, and together with the associated Industrial Policy Action Plan, call for a paradigmatic shift in our mineral exploitation so as to maximise the long-term returns from our endowment.

South Africans are still not fully reaping the benefits of that endowment. Too much of this mineral wealth is still exported as raw ore, while we import manufactured products from those same export destinations. This is essentially an exportation of jobs and economic value.

The importance of the Government-approved Beneficiation Strategy is to address the important issue of adding value to South Africa's minerals in furthering the interests of our own economy.

The Beneficiation Strategy will also contribute to the development of another key jobs driver in the NGP – the knowledge economy.

As one of the key constraints to the growth and development of the mining sector, skills development will be a priority in 2012.

Performance in the schooling system is at the heart of building the skills base for economic growth and development and ensuring that society is able to achieve equity and development goals.

A major achievement for government is the doubling of Grade R enrolment, from 300 000 in 2003 to 705 000 in 2011. There is a clear sign that we will meet our target of 100% coverage for Grade R by 2014.

To fight poverty and inequality and to keep learners in school, over eight million learners attend no-fee schools and more than eight million benefit from government’s school feeding scheme.

School attendance in the country is currently close to 100% for the compulsory band, seven to 15 years of age. However, the General Household Survey in 2010 shows that over 120 000 children between seven and 15 years of age are not attending school.

Government has a strategy in place designed to improve Mathematics and Physical Science results, particularly given the specialised and technical skills our country needs for the drive towards industrialisation, economic growth and sustainable job creation.

Grade 10 drop-outs appear to be a challenge, particularly in the rural and farm areas of the Western Cape. The national Government will work closely with the Western Cape Provincial Government to trace these learners and provide support so that they do not jeopardise their future prospects.

Last year, government instituted a Section 100 (1)(b) intervention in the Eastern Cape to assist the Department of Education to improve the delivery of education. The implementation of the intervention is still in place.

Processes are being finalised to evaluate principals and deputy principals. This will inaugurate a new era of performance agreements, accountability, sound school management and the accruing benefits of quality teaching and proper use of time.

Addressing school infrastructure and providing a productive environment for learning and teaching will go a long way in creating a professional working environment for educators and help in elevating the status and dignity of teaching.

Government welcomes interventions which complement its work in combating corruption. These include the launch of Corruption Watch by the Congress of South African Trade Unions as well as the recent agreement between government and business to implement anti-corruption programmes.

Our evolving jurisprudence championed by the Constitutional Court should always strive to advance the values of a democratic society and improve the quality of life of our people.

The Constitution creates a complementary framework, where powers are exercised in a manner that would entrench the overall text and spirit of the Constitution as a whole.

The judiciary by and large must interpret laws that seek to buttress our democratic order in line with the general injunction of the Constitution. These laws are instruments enacted by the Legislature, hence the powers to make laws do not reside with judges but with the legislature.

Similarly, the power and mandate to interpret the law does not reside with the Legislature or the Executive but with the Judiciary.

The Executive is charged with political administration to ensure transformation and development, and not with the Judiciary. The Executive does not make laws nor is it its duty to make impartial interpretation of the laws in instances of conflicts.

The Constitutional Court continues to have a significant role in the transformation of society, which is underscored by a series of landmark judgments by the highest court of the land.

It is within this context that the judgments of the courts, in particular of the Constitutional Court will generate debates and criticism which is not unusual in a constitutional democracy.

Land reform is at the core of South Africa’s democratisation process.

The year 2013 will mark the centenary of the Natives Land Act, 1913, which took away 87% of the land from the African people.

The Constitution requires that the State must realise the restitution of land rights for those who were dispossessed by the 1913 law.

Government has introduced a new policy framework, the Green Paper on Land Reform and urges all South Africans to participate in the process of improving land redistribution and reform to reverse the impact of the 1913 Act.

Government has distributed 8% of the 30% target of land redistribution for 2014 that it had set for itself in the area of land redistribution.

The process is slow and tedious and there is general agreement that the willing buyer-willing seller option has not been the best way to address this question.

It is important to develop communities, understanding that the quality of life for many is undermined by the fact that they must travel great distances to get to and from work. It is critical to develop a more coherent and inclusive approach to land.

All municipalities should be encouraged to formulate specific land policies showing how vacant and underused land will be developed and managed to achieve wider socio-economic objectives.

2012 – Year of public infrastructure delivery

Sustainable infrastructure development is the only way that South Africa and the rest of the region can address challenges on social and economic development. In addition, regional infrastructure integration will support growth and facilitate trade and development in Africa.

Being a gateway to other African markets, South Africa is an important emerging economy that must work more on supplying energy, transport, communications, ports, rail links, pipelines, road and rail infrastructure and investment in the continent.

South Africa’s R300-billion public infrastructure programme, including those projects that will unlock key mineral resources and exports, were given strong emphasis by President Jacob Zuma in his 2012 State of the Nation Address.

Infrastructure projects in energy, transport, public works, water, ports and harbours and communications and information technology (ICT) will play a much needed role in the country’s social and economic development.

Effectively declaring 2012 the year of infrastructure delivery, the President highlighted five major geographically focused programmes, as well as a host of infrastructure initiatives designed to support health and education, the upscaling of ICTs, as well as to accelerate regional integration.

The President also committed to convening a Presidential Infrastructure Summit to discuss the implementation of the plan with potential investors and social partners. The plan itself will be overseen by the Presidential Infrastructure Coordinating Commission (PICC), which was established in September under the leadership of the President and Deputy President, and also includes ministers, premiers and metropolitan mayors.

These infrastructure projects will help develop better economic links between outlying areas and the main urban centre and make it easier for companies to export and do business locally.

The impact of these projects will mean that many areas of the country will have a heightened level of economic opportunity, accompanied by job opportunities as well as opportunities for people to manufacture the inputs that go into the investment of infrastructure development.

Government, through various infrastructure projects, prioritises job creation to accommodate the youth, unemployed and the poor.

Through the establishment of Expanded Public Works projects, road construction, water and other infrastructure projects, government is better positioned to create jobs. Government will continue to respond to the needs of its citizens.

Government’s planned Limpopo infrastructure development will be connected with urban planning to create the first post-apartheid new city with potential for green technologies in housing, community facilities and workplaces. The Durban-Free State-Gauteng industrial and logistics corridor will not simply go through the Free State, but is planned to be a major stimulus for industrial and agricultural development in that province.

The Umzimvubu Dam will be accompanied by the building of the N2 Wildcoast Highway to connect rural communities, link farms to markets and reduce transport times between the East London and Durban by about two hours. The rail-line from the Northern Cape is connected to a new private-sector manganese sinter plant in the province, and is due for completion by June.

Government will also roll out the revamped S’hamba Sonke road maintenance programmes in rural areas, and find ways to integrate them with the nationally coordinated provision of water and sanitation, school-build programmes and health clinics. This will initially be done on a pilot basis in the 23 poorest rural districts.

To ensure that the benefits of the infrastructure programme are widely spread, government intends to include development targets in the project and tender specifications covering jobs, skills, industrialisation and local content, small and medium enterprises and empowerment and greening the economy.

Key messages

Supporting statements

Investment in infrastructure is government’s contribution to job creation and economic growth. Now partners must “Play your Part”.

Government will use its infrastructure plans to build an industrialised economy that tackles the challenges of unemployment and faster economic growth in order to reduce and ultimately eradicate poverty and inequality.

The planned infrastructure investment will allow the South African economy over the longer term to increase in productivity and become more competitive.

Government, through the prioritisation of infrastructure development, has already assisted in job creation as it has become one of the biggest employers in the country.

Government’s large-scale developments such as electricity plants, rail and road upgrades and water management will sustain between 50 000 and 100 000 jobs in the construction sector up to 2015.

Government has identified five strategically located infrastructure development projects to unlock economic potential.

Limpopo: The most important plan is to develop and integrate rail, road and water infrastructure around Waterberg in the western part of the province and Steelpoort in the eastern part.

Mpumalanga: There are plans to expand rail transport that connects coalfields to power stations. This shift from road to rail in the transportation of coal will help preserve the roads.

KwaZulu-Natal-Free State-Gauteng Logistics and Industrial Corridor: Planned infrastructure investment will improve the movement of goods and economic integration of the main economic hubs of Durban and Johannesburg.

Eastern Cape: Government will develop a major new south eastern node that will improve the industrial and agricultural development and export capacity of the region, and expand the province’s economic and logistics linkages with the Northern Cape and KwaZulu-Natal. The State is committed to building a dam using the Umzimvubu River as the source in the Eastern Cape to expand agricultural production.

North West: The eastern parts of the province will benefit from the greater focus on infrastructure development connected to mining and mineral beneficiation. This province will also gain from the expansion of the roll-out of water, roads, rail and electricity infrastructure. Moreover, 10 priority roads will be upgraded.

Government is so serious about infrastructure that the President himself drives this commission.

The Presidential Infrastructure Coordinating Commission (PICC) is at the centre of government’s efforts to create employment opportunities for all South Africans and transform the economy and society.

The commission was established in September 2011 to accelerate job creation through public-sector projects and brings together ministers, premiers and metro mayors for effective implementation.

The PICC has already identified and developed projects and infrastructure initiatives from state-owned enterprises as well as national, provincial and local government departments.

Government will also develop focused project-management systems and clear performance dashboards to identify the state of progress with build programmes to enable the three spheres of government to intervene early and decisively.

A nation’s infrastructure plans offer one of the greatest indicators of its investment potential.

Government is building on the national and international confidence that was earned through the realisation of a world-class infrastructure plan that saw one of the most successful hostings of the World Cup in 2010.

In order for a country’s economic activity to thrive, there needs to be an efficient and functioning transport system, power supply, water and waste management and social infrastructure.

South Africa’s bid to host the Square Kilometre Array radio telescope, in partnership with eight other African countries, holds enormous benefits for our scientific infrastructure development and creates numerous economic opportunities in the Northern Cape.

South Africa’s continued investment in social infrastructure plays an important role in how communities live and interact. Government has identified infrastructure projects to help lay the basis for the National Health Insurance system, including the refurbishment of hospitals and nurses' homes.

Access to tertiary education will receive a boost in Mpumalanga and the Northern Cape through the allocation of R300 million towards new universities for the provinces.

Government has identified an array of options to fund its infrastructure projects.

A number of the components of the infrastructure plan have funding committed through the National Budget or the balance sheets of state-owned enterprises (SOEs).

There will be a reprioritisation of funds across government with a clear shift from consumption to investment so that the basis is laid for long-term prosperity.

The Presidential Infrastructure Summit will highlight opportunities open to the private sector to invest in the country’s build programme.

Government will also work with retirement funds on opportunities for long-term infrastructure investment that match their long-term pension obligations to members.

South Africa will collaborate with international partners, including Brazil, Russia, India, China and South Africa (BRICS) and Gulf Cooperation Council countries to tap into capital from sovereign wealth funds and private investors.

Government will introduce measures to safeguard the integrity of the build programme.

Specific anti-corruption measures will be identified and built into all processes of the infrastructure programme.

Combating corruption in the tender process will ensure that public funds will go to building infrastructure and supporting service delivery.

The competition authorities are ready to crack down on collusion and price fixing between contractors who drove up prices of supplies and services in past programmes.

Government is also in discussion with the private sector and organised labour to conclude an integrity pact as part of a broader accord to address the need for competitive pricing, firm action against public- and private-sector corruption and cooperative industrial relations.

Developmental state

In his 2012 State of the Nation Address, President Jacob Zuma highlighted: “As a developmental state that is located at the centre of a mixed economy, we see our role (as the Government) as being to lead and guide the economy and to intervene in the interest of the poor, given the history of our country.”

South Africa has to grapple with a complexity of issues as it drives to address the legacy of apartheid. There is no single solution for dealing with poverty and inequality.

At the heart of a developmental state is socio-economic development. The envisioned developmental state is one that must be democratic and mobilise society as a basis for “popular legitimacy”, and requires a “People’s Contract”. One of the central principles underlying the role of the developmental state is that “people acting collectively in the spirit of human solidarity must shape the contours of economic development”.

This is informed by the understanding that state intervention is a means to an end. The critical objective is to ensure higher rates of economic growth while redressing the imbalances of apartheid. That means firstly ensuring that previously disadvantaged communities have equal access to basic services and the tools and resources to improve their lives. The developmental state therefore ensures that South Africa conducts itself in a "socially beneficial manner", so that the benefits of growth are shared by all.

State intervention is therefore premised on two considerations: strengthening the ability of the nation to deal with poverty and inequality and strengthening growth and competitiveness.

Government has put in place programmes and interventions in the economy in the interest of national development, higher rates of growth and social inclusion.

At this stage, the developmental approach is not only about equal opportunity for development but also about intervention in the economy so that growth is fostered: infrastructure investment is precisely such a lever.

Despite the devastating impact of the global recession, South Africa is still in a strong position due to government’s interventions which supported job creation, maintained the value of the social wage and financed economic transformation.

Key messages

Supporting statements

Government’s drive over the last 18 years has helped to deliver basic services to the most marginalised.

Since 1994, this democratically elected government has strived to ensure that all South Africans, regardless of race or creed, have access to basic services and equal opportunities and respect for basic human rights which are protected by our Constitution.

Government has put in place key interventions and mechanisms to ensure that national, provincial and municipalities work together in ensuring a better life for all South Africans.

Government programmes have ensured that backlogs are addressed and that access to basic service has improved.

In 1994, only 62% of households had access to running water; by 2010, 94% of households had access to running water.

In 1994, only 50% of households had access to decent sanitation; by 2010, 80% of households had access to decent sanitation.

In 1994, only 51% of households had access to electricity; by 2010, 75% of households had access to electricity.

South Africa is a developmental state that operates with a mixed economy at its centre.

Government intervention is required to ensure that the majority of the people have basic services to improve their lives.

In the same way, government has begun to use its levers to foster economic growth and protect South Africa from the recession – infrastructure investment is one such lever.

Government's partnership with business and labour has been enhanced since the launch of the New Growth Path with accords signed on the green economy, skills development, education and local procurement. This is helping to rebalance and restructure the South African economy to promote inclusive growth.

Employment creation has become a central criterion for all government's economic programmes and projects. All government entities, including state-owned enterprises, are now taking the impact of their work on employment more explicitly and systematically.

Government is ensuring that industries that are developed within the economy are labour absorbing and allow for higher rates of export for the country.

Government has a responsibility to protect the interest of the poor.

Government is leading and guiding the South African economy in the interests of national development, higher growth rates and social inclusion.

The overwhelming electorate mandate empowers this Administration to protect the interest of the poor from economic downturns, capitalism's propensity toward financial crises and unemployment.

Given the history of inequality in South Africa, the State must have the capacity to intervene in the interest of protecting the poor, particularly around unemployment.

Our employment challenges stem from the structure of our economy, with sophisticated established businesses on the one hand and the majority of the population unable to access this economy on the other.

Government is stimulating economic activity to support the areas that lack private-sector interest.

To promote access to home finance, government has introduced a R1-billion guarantee fund through the National Housing Finance Corporation to enable lower income earners to qualify for a home loan from an accredited bank, with a subsidy of up to R83 000 from provinces.

Government’s initiatives also include the establishment of more than 300 cooperatives under the Comprehensive Rural Development Programme, which has injected economic life into rural areas and enabled ordinary South Africans to take control of their destiny.

Last year under the Community Work Programme, which provides work experience and promotes social and economic inclusion in poorer communities around the country, more than 80 000 people had access to job opportunities.

Government, through the prioritisation of infrastructure development, has become one of the biggest employers in the country. Over the last year, government’s large-scale developments such as electricity plants, rail and road upgrades and water management ensured that these projects will sustain between 50 000 and 100 000 jobs in the construction sector up to 2015.

The mining industry is central to the South African economy and was the driver of South Africa's industrialisation.

Government is obliged to explore all avenues to secure maximum benefit from its resources. This will be done in a consultative and democratic manner.

After 18 years of democracy, it is important to evaluate the contribution of various sectors to our developmental state. One such sector is the mining sector where the intention is to create a mineral beneficiation industry which is characterised by incentives to encourage local beneficiation.

Where the Government has been able to influence the economy and open up job opportunities, it has been doing so, and in the process stimulating economic activity in areas.

Government is engaged with strengthening the ability of the nation to deal with poverty and inequality and strengthening growth and competitiveness.

Government is committed to reverse the deliberate policies of exclusion at the top end of the economy that were directed against black people and women.

Government calls on social partners, from business, labour and government, to join hands in the war against non-compliance with the labour laws of the country.

Black Economic Empowerment (BEE) remains a key policy of the Government to bring about meaningful changes and restructure the economy to ensure participation by black people at all levels of the economy.

BEE is not simply a moral initiative to redress the wrongs of the past but a pragmatic growth strategy that aims to realise the country's full economic potential.

Labour laws in South Africa are a product of a robust social dialogue. All parties and stakeholders in the economy must take ownership and account for a lack of implementation.

In areas of non-compliance, government plans to amend the Broad-Based BEE Act, 2003 to establish a statutory commission that will deal with non-compliance and circumvention. The proposed law will also criminalise fronting and other forms of empowerment misrepresentation

The social partners at Nedlac have discussed South Africa's challenges over a number of years and have used social dialogue as an effective tool to address these challenges.

The constituents of organised labour, the business community and government have participated in the governing body of the International Labour Organisation (ILO) and have supported the introduction of the decent work country programme as a means of translating ILO values to national realities.

Highlights

The Presidency

Presidential Hotline making a difference
According to the latest statistics, the Presidential Hotline has an overall case resolution rate of almost 80%, which is a significant milestone in the history of the hotline since its establishment in September 2009. Since 31 January 2012, the hotline has logged a total number of 122 589 calls nationwide with the overall case resolution rate standing at 79,89%. This is a major improvement since 2009, when the resolution rate was at 39%.

Budget 2012/13

Budget deficit
Budget deficit is projected at 4,6% of gross domestic product (GDP) for the fiscal year to March 2013, below economists’ expectations of 5,4%. The deficit is projected to fall to 3% by 2014/15.

Crime

Serious crime levels decline
The Justice, Crime Prevention and Security Cluster revealed that serious crime levels had declined by 5% in the last three years. The cluster, led by the Minister of Justice and Constitutional Development Minister, Jeff Radebe, said that for the first time in the period under review, the murder rate had dropped by 6,5%, attempted murder by 12,2% and sexual offences by 4,4%. "These decreases were achieved through various interventions, including proper planning, police visibility and coordination with other security agencies. While we note a decrease in sexual offences, we remain seriously concerned about the increase in rape cases.”

South Africa to build pharmaceutical plant
South Africa is to build a R1,6-billion pharmaceutical plant to produce the ingredients for antiretroviral medicines, used in the treatment of HIV and AIDS. The plant, which will be established near Pelindaba in Gauteng, is a joint venture between the South African Government, through Pelchem (Pty) Ltd, and Swiss chemicals and biotechnology company Lonza Ltd.